 Good evening everyone and welcome to the November 21st 2019 regular meeting for the City of Santa Cruz Planning Commission. We'll call the meeting to order and request a roll call please. Commissioner Schifrin. Here. Commissioner Conway. Here. Commissioner Nielsen. Here. Commissioner Greenberg. Here. Commissioner Singleton. Noting absent. I'll confirm with or without notification. Vice Chair Spellman. Here. Chair Pepping. Present. And Commissioner Singleton is absent with notification. Great. Thank you. Are there any statements of disqualification for the agendized items tonight? Seeing none, the next item on our agenda is oral communications for what we have agendized will welcome public comment on those items. This section is for public comment from anyone who wants to speak to the commission that anything pertains to our business but is not on tonight's agenda. Is anyone wishing to address the commission on those matters? Seeing none, we'll move to the next item. It's approval of minutes. Would entertain a motion to approve the minutes of the August 15th meeting or discussion of changes? So moved. I just have one quick change which is that my name is not on the roll call. And it should be. Would you catch that? Commissioner Greenberg's name is not on there. Was there a second? Do you second that motion? Second. Second with the amendment? Change. All in favor? Aye. Aye. I believe I was absent August 15th, so I was absent as well. Catch those abstentions. Okay. So minutes pass and then I would entertain a motion for the special meeting, number more 14th meeting. It's motion to approve minutes for November 14th, 2019. We have two minutes. All second. Any discussion or amendments? This is the last last week's meeting. This one was on the 15th, November 14th. Those are posted, so I'll let you abstain if you wish, commissioner Schifrin. All in favor? Aye. Aye. Aye. I'll vote in favor in the hopes that the minutes do reflect my quest to have the record show why I vote. Motion. Okay. I didn't realize that those minutes had been sent out. We have a very interesting process in this age of the Internet of changing the agenda after it's first posted and I think it went it was first posted. Oh, I missed it and I'm sorry. In all abstain, I was absent. Okay. So, did you catch those votes? All right. So, the next item is a presentation, I believe, from Dr. Tiffany Wise-West on the Resilient Coast Santa Cruz Project. Welcome. Thank you very much. Good evening, commissioners. Tiffany Wise-West, Sustainability and Climate Action Manager for the City of Santa Cruz and I'm delighted to be here this evening to share with you our progress on the Resilient Coast Santa Cruz Initiative. So, we have the need to address a number of things with respect to coastal management. Everything from access to transportation to habitat and ecosystems to sense a place and cultural identity and equity and we are doing so through an inclusive conversation in order to create a community vision for what resilient coastal management in the face of climate change looks like that has a timeline out through year 2100 with the aim of achieving a resilient and equitably accessed coastline. So, the Resilient Coast Initiative is really comprised of two projects. The first is a West Cliff Drive Adaptation and Management Plan and the second, we really just call our beaches project because this is a mouthful, but it's the development of local coastal programs, sea level rise strategies and policies that support beach and public access protection. And just to remind you, the LCP is the policy document that when certified by the Coastal Commission allows us to issue most coastal development permits that are consistent with the Coastal Act. On this project or these two projects, we have an internal team that's working on this, as well as a 17-member technical advisory committee of which Commissioner Schifrin is your representative from the Planning Commission. So, just a few things to kind of remind you why we're doing this project. So you may remember about a year ago when we adopted our 2018 Climate Adaptation Plan. This is an image from our very first sea level rise vulnerability assessment. And what you're seeing is all of that blue shaded area that is located down in the beach flats, the lower ocean area and over it near a lagoon, as well as running along the coastline are the combined effects of climate change. So that would be rising tide, coastal storm, flooding and erosion. And the darker the color is, the closer to now our baseline year was 2010 and the lighter the color, the shades of blue is further out towards 2100, our kind of furthest out time horizon. And really no big surprises here. We have increased flooding down in our beach flats and lower ocean area. We have increased erosion and flooding over at Arana Gulch, as well as some near neary lagoon, Bethany Curve and over at Natural Bridges. And we have potentially up to into the first block of erosion along West Cliff. That is if we did nothing at all. We also have over two dozen access points along the coastline and at some of the waterways that lead to the coastline that also coincide with these hazard zones, these coastal hazard zones. And we have nearly two dozen surf breaks that are also located there, which we have projected that between 2040 and 2060 we could see the surf breaks between Cowl Beach and Steamer Lane be drowned out. We also have habitat, so all of this shaded areas are sensitive habitat, both aquatic and terrestrial. And you can see that much of those sensitive habitat areas overlap with our hazard zones. So again, another thing that we are looking at is how can we ensure that we provide connectivity to alternative habitat sites. If habitat is impacted by erosion or flooding or what not, or increased temperature for that matter. And that orange that you see above is also our fire hazard zones, not just the coastal hazards that we're showing here. Of course, we have people, and this is a slide you've also seen before. We did build a social vulnerability to climate change assessment last year, where we looked at the incidence of poverty, crime, disability, age. And English not spoken as a first language, building a score by census block group, and ranking them relative to one another. Where you see the red census block group, so those with the highest social vulnerability and the green are those with the lowest. And you can see the arrows point to a couple areas along the coast. Namely, the red area, kind of a greater beach flats area, where high social vulnerability is driven by the incidence of Spanish speakers and low incomes. And you see medium, high social vulnerability over that orange area on the west side of Santa Cruz, which is driven primarily by the incidence of elderly folks. And so we're using this tool to understand the drivers of social vulnerability, where they overlap with our coastal hazard zones, and how can we tailor strategies that help these people the most. And these projects, this initiative has a central focus on equity. And I'm going to tell you a little bit more about that in a moment. These are some images actually from the projects. What could happen to West Cliff Drive if we took no action at all on sea level rise and coastal storms? So you see in the upper right-hand corner, this is a very typical profile. Over 50% of West Cliff Drive is actually armored mostly by riprap, otherwise known as revetment. Those are those big boulders that are stacked up. Some of those are up to five tons in weight, believe it or not. So this shows a nicely stacked revetment that's performing as intended, preventing wave attack on the bluff. But as you continue down lower, you see that with sea level rise, that nice, dry pocket beach is starting to become reduced in width. That's exacerbated by the displacement of that revetment or that riprap where it is no longer fully serving its purpose. And we potentially might have erosion of that habitat area and potentially our bike pad path. And if we allowed that to continue further, we would see that eventually we would lose that pocket beach. The riprap would no longer serve its purpose. And we could encroach into the West Cliff Drive itself. Similarly, what could happen with the beaches is a very similar kind of evolution of coastal change. So we have a densely developed area behind a very short sea wall, a nice expanse of dry beach. This is very typical of main beach, say. And as you go through time, you see with sea level rise at the width of the beach begins to narrow that we're losing sand. And eventually we could see under some conditions overtopping of that sea wall and that flooding that we saw on that 2D map that I started with. So how we are trying to, the approach we're trying to take with these projects is called adaptation pathways. Because there is uncertainty as to when, if and when we will see these kinds of impacts, it's difficult to plan for them when you peg them to a specific time horizon. Then you may make investments too early or too late. So taking this adaptation pathways approach instead ties the initiation of whether it's planning or some kind of implementation of infrastructure to actually physical triggers. This image that I'm showing you is from Imperial Beach. We're in the process of developing our own now, but this is very illustrative of a typical visualization of adaptation pathways. You see across the top depth of sea level rise is the trigger that's being utilized in this case. They did also put some projections on the anticipated time horizon. And you see that between zero and 1.6 feet, they intend to maintain their existing armoring at some point, replacing the riprap with a sea wall. And at 1.6 feet, they need to transition into sediment management while beginning to plan for elevating roadways and structures. So we will be developing these kinds of visualizations that you can look at a glance to see for different profiles along the coastline. What is the plan going forward? One other thing here, these are typical kinds of triggers that we are considering right now, so depth of sea level rise. Things like repetitive loss with the beach, for example. These are various examples of triggers that we are considering right now. So the project really got started in earnest in June. We were contracting through April through June. And there are essentially three phases to this project. We are just finishing up the first phase, which is really the benchmarking and data collection. And I'll give you some more specific details on each of the projects. We then turn towards the end of the year, after the end of the year into phase two, which is analysis of the adaptation options, where we will be identifying and starting to analyze those options for their cost feasibility, regulatory feasibility, and what the community would like to see as well, what their preferences are. And then these projects run to the end of 2020. So our third phase will be to develop the actual plans and policies. In every stretch of the way these red stars indicate we have a lot of outreach that has already been conducted, which I'll share with you, and planned for this project. We really want this to be a community-informed and community-driven process. So on the West Cliff Drive plan, we are very fortunate that this project is being led. It was competitively bid and Revelle Coastal, which is Dave Revelle is a local geomorphologist, is leading a team of Gary Griggs, Charles Lester, who's the former Coastal Commission Executive Director, Gromswell Coastal Ecology, Central Coast Wetlands Group, who completed our sea-level rise vulnerability assessment, Harro Kusunich and Associates are the engineers, and Farron Peers are the transportation planners. This is a grant from Caltrans. We do have a $44,000 match that we're bringing in. And the TAC has just finished reviewing Deliverable One, which is the existing conditions inventory, and the future hazard projections are coming very soon. This deliverable is due at the end of the year, and you can see the other deliverables that are ahead. The scope of work is somewhat similar, but not entirely to the Beaches Project, which is funded by the California Coastal Commission. We have a much more significant match in the form of primarily labor and a little bit of cash. We have aligned these projects together so that their due dates are at the same time so that we can optimize our technical advisory committee's time and we can coordinate our outreach together. So that's really beneficial, and we're grateful to the funders for allowing us to do that. And in fact, both projects are benefiting, excuse me, from an outreach specialist we've been able to hire, and the Coastal Commission has said, yes, please integrate that with your West Cliff project. We think we'll be getting better products. So the policy and strategy analysis is, again, just got the tech just completed reviewing this on Monday. It'll be due at the end of the year, and then we're turning into the socially vulnerable populations impact analysis, and you can see the rest of the deliverables that are coming after that. So in terms of the community outreach, we've really broken this into kind of a number of touch points. We're just, we have just finished up introducing the project. We really wanted to spend some time building relationships in the community, particularly with underrepresented communities, building on the foundation that we started in the adaptation plan, where we did a number of events with underrepresented communities, and really doing some community visioning, asking folks, how do you use the coastline? What are you concerned about with the coastline? What kind of ideas might you have? From there, we're turning into, we'll be presenting these existing conditions and talking about the adaptation strategies and really trying to ensure that our residents are informed on the trade-offs of different adaptation strategies, what the cost, relative costs are. So then when we ask for preferences that they really are making some informed input to the process. So this is what we've done so far and what's planned. We've already conducted eight focus groups, 600 surveys on West Cliff Drive where we're asking folks some of these things about their uses and so forth. We've done 105 interviews in the beach flats in Lower Oceania and partnering with San Jose State University on that work. And we've already completed 30 talks with community groups and student groups like guest lectures and things like that. In December, we're going to be having one-on-one meetings with underrepresented groups where we're going to be sharing our methodology for analyzing impacts to those groups and asking them to please tell us, is this methodology sound? Would you do it differently? And begin to get feedback from them on how coastal change and any adaptations that we're proposing or considering evaluating understanding how they impact these folks in terms of where they live, work, play and worship. Our virtual reality app shows sea level rise and it starts to introduce some solution concepts that just launched at the library this past Sunday. I encourage you to go and take a look at that. I'll have a slide later on that. We have two community workshops that are going to be happening in the first half of 2020. And then later in the year, the second phase of our virtual reality application will be out in a mobile phone environment in both Spanish and English. Really think that we can reach a lot of people with that. It will also model solution preferences into the app. We will have an open house to share after we've kind of heard from the community about what their preferences are and we go back and develop the plans. We'll have an open house and we'll do those check backs with the underrepresented communities to make sure that we are getting their feedback on that as well. Just to share with you some of the top coastal concerns, this really breaks it out by different groups but in a nutshell, there are two major items that we saw consistently across all of the focus groups and those concerns are around erosion and various facets of transportation. And so you can see we've really heard loud and clear that there are conflicts between bikers, pedestrians and cars on West Cliff Drive and that's clearly CalTrans is funding this transportation is a big focus so that's something that we aim to address. We asked what's the best thing about West Cliff Drive? Well, even though the biggest concern is the bike ped path, it is identified as the best thing about West Cliff Drive as are the access to scenic views, the access to viewing and or accessing surfing getting down to the breaks. We also asked folks what does resilience mean to you in one word and these are really the universe of terms that we heard. This is really helping us to build goals around these projects and we have this little chap on the right hand side that's paging through our adaptation plan at Open Streets where we got to, we gave out over 200 stickers at that event and there were thousands of people there so that was really a wonderful opportunity to introduce some of this work to the community. In terms of our virtual reality C-level eyes explore, this is such an immersive experience and again I really hope that you can make it over to the library to take a look at this, it takes about 10 minutes. These are some panels that accompany the activity station at the front of the library that you can check out. This work was funded by the American Geophysicist Union along with some of the funding we already have from Coastal Commission and here's our fire chief and our emergency operations manager checking this out at a disaster preparedness event that we debuted our virtual reality app at and again this is at the library for the next three months. We also have a card game that we developed called Cards Against Catastrophe we've been playing that at some pub nights really gives people a feel for the decision making that bodies like yourself and the city council needs to make around investments in emissions reduction and climate adaptation and it's kind of in a low pressure kind of way that you can play this game and get a feel for that. So with that, thank you and if you have any questions I'm happy to take them. Thank you for the presentation. Thank you. For all the work and the leadership. Commissioner Schifrin. Well as a member of the TAC I feel I am accompanied upon me to give my own report. Steph has done an incredibly good job juggling all these issues about how complicated this whole process is. Not only is it complicated to figure out what's going on at West Cliff Drive and as well as what should be done about it but having two contracts going at the same time with somewhat overlapping areas makes it in concert with a number of regulatory agencies is very, it's a very major, I am very complimentary staff about the work that you're doing. Let me just briefly give a couple of points about having read over the initial reports that have come out. I'm not a technical person in this area the TAC has many technical people on it who I think are providing helpful input and of course the consultants are technical experts but what I got out of it were a couple of things that surprised me. One is that sea level rise data is not very adequate for Santa Cruz. The data is kind of based on a gauge that's in Monterey and how relevant it would be to our particular situation. So one of the recommendations is that the city move forward and get engaged so that there's better information. The other thing is that sea level rise doesn't seem to appear to be as significant as earlier thought because the land is going up as the sea level is going up. So there's still a good deal of uncertainty about just how serious and what I took out of it is that made me less concerned about sea level rise and more concerned about episodic events. Big storms during high tides, I think potentially more dangerous to the cliffs than sea level rise in the short term as opposed to long term. So I thought that was interesting. The other thing that I think is critical is the whole one of the things that the information points out is that all the different points along the west cliff were identified in terms of whether there's a high hazard and whether there's a high risk or a low hazard, low risk. And there are a number of areas that are a high hazard and a high risk. And if you walk on the west cliff, you'll know what some of them are. And I think one of the challenges because there are 50 sites altogether is coming up with a series of adaptations that sort of reflect dealing with those places that are in the worst shape in earlier time in terms of the overall strategy of, which I think makes sense, which is responding at the time before the problem but not too far before the problem hits so that you're not spending money that doesn't need to be spent for a while. And a lot of this is in a context of not really knowing how long things are gonna take. So I think it's an interesting process. I'm looking forward to getting the particular strategies. I look forward to the consultants trying to figure out how to make the pedestrians and the bikes on the west cliff path work within the right of way that exists. I mean, I think it'd be great if they can come up with some creative solutions, but it's a real challenge. Anyway, I just wanted to add my, what I've gotten out of the process so far. And thanks there for their work on it. Thanks for that addition and thanks for serving on the subcommittee. Other comments or from commissioners or questions of staff? So the focus is on west cliff drive and then also the red areas that are considered to be the high vulnerability areas as well, or how does that jump in? Yes, thank you. I'm sorry, I failed to specify what the exact geographic scope is for both projects. So on the beaches project, we're talking about sea bright main cowl, the pocket beaches along west cliff and natural bridges. So that's the scope of the LCP update project. And then from west cliff drive, it's from the wharf to natural bridges. And so it's essentially the coast and basically one block back. Yes. And I wanted to follow up on commissioner Schifrin's mention of the title gauge, the city's been an active conversation around this very issue for a long time now. And we have reignited these conversations earlier this year in the early summer. And so we do think that there is a possibility of doing some cost sharing with the county and there is ongoing maintenance and calibration required on an annual basis that we think USGS and NOAA might be interested in supporting. So it's, we're kind of to the point of trying to fit all those puzzle pieces together and get an agreement between those entities. But we all do recognize that having a title gauge here is really critical and that can be utilized for a number of different things beyond tracking the depth of sea level rise. Okay. Would members of the public like to address the commission on this? We're not taking any action. It's just a presentation that our meeting guidelines encourage us to receive public comment. Anyone like to address the commission? Okay. I think with that, we'll just say thank you and we look forward to an update and good luck with all of the work. Thank you very much. Thank you so much. You're welcome. The next agenda item is a public hearing. It's an ordinance amendment on the inclusionary housing requirements ordinance and related number of things related to council direction and recommendations from staff. So Mr. Butler, do you wanna start that out with a staff presentation? Sure. Thank you. I'm Lee Butler, the director of planning and community development. And with me this evening, Bonnie Lipscomb, she is the director of economic development. And Bonnie is going to kick off the presentation with a discussion and I'll be chiming in in times as well. Great. Thanks, Lee. And good evening, Chair Pepping and members of the commission. It's my pleasure to be here this evening. And as Lee said, we'll sort of be leading portions of this presentation together. First, I just wanted to start out and give you a little background. Before I go into that, I just wanna acknowledge actually the packet that you have, which is confusing on one level. We actually made a mistake in the attachment. So I just want to briefly explain that we'll go through them step by step together today to clarify that. The first two attachments in your packet relate to actions that the council already took. So it's attachments three and four relate to the actions that you will focus on tonight and we'll go through that together. So the background behind what's in front of you this evening relates to our inclusionary housing ordinance. And I briefly just wanna just back up a couple of years and some of you were on the commission, I believe when this came through previously, but just as part of the presentation that we gave to council to provide the context for what's before you this evening, we thought it would be important to give you the background of how we got here. So this is following an 18 month review that started in 2017 of the city's inclusionary ordinance. Moving forward in June of 2018, the city council approved recommendations by the housing blueprint subcommittee, which included and over the 100 initial recommendations and included a number related to our inclusionary ordinance. This did come through the planning commission in August of 2018. And in October of 2018, the city council approved the changes recommended by the planning commission. Specifically these changes that were established related to different rental inclusionary requirements for the downtown and outside the downtown. It was determined that inside the downtown 15% inclusionary requirement was appropriate and feasible and outside the downtown, mostly due to what our consultants perspective was, the difficulty of actually doing density bonus outside the downtown, it was established at 10%. And then additionally, we had changes related to a certain set of circumstances created by statewide case law that's no longer relevant. In January of 2019, a loss of actually that, you know, that is right, I was thinking it was 2018. 2019 a lawsuit was filed against the city on the grounds that the changes were a violation of measure O, measure O is the 1979 measure that established basically our inclusionary affordable housing requirements in the city. And so our ordinance is based on measure O, which basically says 15% of a housing and new housing production in the city will be affordable to persons of average income. And I mentioned that now because that will come up a little bit later in our conversation. On September 25th, 2019, the city and the plaintiffs executed a settlement agreement settling the lawsuit and overturning the two main changes that I just outlined on the left in the 2018 ordinance. Specifically, these are the sections, you don't really need to know the sections, but if you wanna call them out later, this relates to removing the designated different inclusionary rates for downtown and outside downtown to just make it 15% citywide. So those three changes in that top left box just relate to that itself. And then the bottom one relates to that specific state case law that I mentioned, which allowed the city and the council to consider, not necessarily by right, but to consider reduced inclusionary percentage for projects that fall within a specified time period. And this is that period between 2009 and 2018 where we couldn't enforce our rental inclusionary ordinance. So the actual council direction, we went through and then the settlement changes on October 26th and September 12th and council approved those. So that is now our new ordinance. It's in its 30 days before it takes effect right now. And part of their direction to staff, they asked and directed staff to take to the planning commission for review and recommendation, a review of the additional red line changes that were proposed by the plaintiffs in the settlement agreement. And those are actually outlined in attachments three and four. Attachment four actually has a matrix that goes through each of the red line changes and staff's comments on those changes. And then secondly, council directed the planning commission to review and recommend and for it to come back to council at the December 10th meeting, increasing the current citywide inclusionary rate, which just changed to 15% to consider increasing that to 20% and they want to have that discussed back at the December 10th meeting. So that's the actual, what's before you this evening. Those two things are one and two above. I've added two additional things we're asking you to consider tonight related to those. And that's A and B, which is a consider an additional staff recommendation for changes consistent with state law and Lee will go over that in a minute. And then additionally to recommend to the city council that once they do make a change to the existing ordinance that they actually send it back to you for further consideration. As we're going through it and it's just been very fast and it's pretty complicated. If you've looked at our inclusionary ordinance and many of you I know have spent quite a bit of time with it, different sections relate to other sections and you're going back and forth and you're trying to figure it out and it's pretty confusing. And we think we see a few inconsistencies in there. And then if council changes the inclusionary percentage further, we wanna go back and look at some of those numbers and make sure we don't have things that have fallen through the cracks. For example, we have sections where we have rounding of a 0.7. And if we're changing it to 20% that may not make sense anymore. And so we wanna go back and look at all of those and then bring those back to you and have you consider those and make a recommendation to council. Okay, so going through each one, one by one of the actions before the evening, the first is to review the additional proposed amendments presented by the plaintiffs. And again, this is attachment four. It looks like this in your packet. Those are the plaintiff proposed changes not included in the specified amendments. The specified amendments are the ones that I just went over a minute ago that council approved. So there are about 26 to 28 of these depending on which version we were looking at. And on the left-hand side, you see a summary of the change, the reference to the section on the right side, you see the staff comment. Specifically, our recommendation is, and we have this in the staff report to you as well, is to take no further action on the additional proposed amendments in the red line on the grounds that the changes would either violate state law and government code and or have a potential or real adverse impact on the city's affordable housing production. Part of this also relates to, there's some interpretation of why some of the changes are in the red line. We did ask for some clarification from the plaintiffs and through the plaintiff's attorney and we didn't receive any feedback from them of why they wanted them. So we were trying to analyze and speculate on why they wanted some of the changes but we really didn't have enough information. So we did our best estimate of the analysis of why we think that what they were trying to get at and what some of the implications are would also create further inconsistencies within the text. So that is our recommendation related to those but we're available to discuss any of those if you would like to go through those. Additionally, as part of that, we, with a passage of AB 330, we do want to consider additional staff recommendation for changes consistent with state law and I think Lee, you may wanna talk to this for a minute or two. Sure, so I'll briefly highlight that. So under the California government code section 66474.2 and then under the pending government code section 65589.5 which the latter is taking effect on January 1st of 2020 as part of SB 330, that bill specifies that if a preliminary review application with the information that's specified in SB 330 itself is submitted and is a complete application, then that sets the clock for the laws and rules that the city can apply to a development project moving forward, assuming certain provisions are met. The formal application has to be submitted within six months, for example, but the law actually precludes us from having new rules apply after that if the applicant is meeting those specified timelines. And so we wanted to call that out here so that it's clear. I did get some correspondence from Commissioner Schifrin in advance of this discussion about whether or not we should call out a specific subsection in government code section 665, excuse me, 65589.5. It's actually a subsection. Thank you. Oh, thank you. Yeah, so that's the text. And then it is a subsection. Oh, I believe as Commissioner Schifrin indicated. And so we do have the ability to reference that, particularly because we also say, or any other applicable state codes, arguably one could apply other sections of 65589.5 to this criteria, however, because we've got that called out or any other applicable state codes, if it pleases the commission, we're happy to call out subsection O in this section. But we do believe this is important to clarify that it's not just up to the city. There are some state codes that apply and calling that out point to people to some resources that they may want to reference when considering what rules will apply in the timing of those. The last part there is just to clarify that it would be rules that are more recently approved by the council, if these other sections don't apply, we wouldn't just make up rules that would be used. It would be rules that are adopted as part of inclusionary ordinance or implementing resolution. And that actually, we were trying to figure out the intent of the plaintiffs in their concerns. And so we thought that might address the concerns that they have to clarify that, yes, it's actually more recent ordinance or resolution that has been adopted by the council that we may use. And I would add to that, in addition, there's just each year, there've been increasingly more and more regulations and state codes and laws that are applicable to affordable housing. And so we wanted to just have some language that allowed us to update those as new laws came into effect. Having the other applicable state codes precludes us from needing to necessarily adjust our ordinance and having just the 65589.5, we initially had that in and of itself because we figure as it has been over the last two years, been amended, it will continue to be amended, but we're clear either way. So if the commission desires to add subsection O, we're happy to make that recommendation to council as well. Additionally, we are recommending that the planning commission consider additional staff recommendation, which I mentioned earlier for future planning consideration of any cleanup amendments following any council decision that's made on December 10th. At that time, we bring that back to you. There may be other parts of the inclusionary ordinance that you may want to recommend be changed as well. And then B as part of that, as I already mentioned, just addresses some of the inconsistencies. And then finally, and I think the part of the big discussion tonight is number two, which is review and make recommendation for the city council regarding increasing this current citywide inclusionary rate from 15% to 20% prior to the December 10th council meeting. And our recommendation, which also is in the staff report, is to consider an increase in the inclusionary percentage citywide for all housing developments, rental and ownership, only after a feasibility analysis is prepared by a qualified consultant evaluating the impacts of changes. And I'm going to specifically just go into a little bit of why we're recommending that. We believe that an informed decision based on credible analysis and market data is important. This is an area that does widely vary. There are, you know, I think it's 11% across the country have inclusionary ordinances. When you look at some recent studies of inclusionary ordinances statewide, they vary widely. It's really hard to compare apples for apples. So a 20% in one area is not necessarily the same as a 20%, both for market conditions, but also because they're often set at different area median incomes. They have a breakdown. I'll go through a few of those in detail. And then markets are different. There could be, we really want to avoid unintended consequences of negatively impacting affordable housing production by making a decision without having it based on analysis and looking specifically at Santa Cruz. And then finally, our most recent study was prepared by Kaiser Marston KMA for rental housing. And it was for rental housing only. We didn't actually have an analysis done for ownership housing. When we took this to council, we did say that in 2020 that we would come back and do an analysis. And then the lawsuit happened and everything stopped. But we don't actually have a recent analysis for ownership housing. We think that the market can bear actually a higher percentage for ownership, but we just don't have that information. So we just feel like we should do that before we go forward. Just as a comparison of nearby jurisdictions, this is just four, because as I said, there's 60 and each one has so many nuances. So this is just a quick look at these. And what I will point out, and we can follow up if you're interested in any of this, obviously give you a copy of the slides and give you some of the backup for this. It varies widely by jurisdiction, even cities and counties around us. So ranging, and these are ones specifically called out because they had at least a component of their ordinance that was at 20%. So we thought it was important to show you what that variation looks like. And then Santa Cruz is a third down, so you can compare that. They include both a variety of compliance options, a variety of set-asides, a variety of threshold sides. Some are the same between rental and ownership and some are different. So it really does vary. I wanna point out specifically, as you look at the rental development, because this really impacts the feasibility of a project to be able to build it from a development side and being able to finance it, is that percentage that I've circled in yellow of the area median income. So when you look at Monterey County, they have a 20% set-aside and we'll go into the details of what there's looks like. But look at that range, it's from 50% up to 120%. San Francisco, their threshold project size is units of 10 or more. So they don't have anything under 10 units. Ours is five or more. There's impacts there. It's more expensive to finance the smaller projects than the larger ones. And their percentage of AMI, it starts lower than ours as a requirement, as a basic requirement, but it goes up to 130% of AMI. You can see Santa Cruz on the next. Santa Cruz also has, unlike Monterey and Watsonville, we actually have, if you try to create or if you want to create units offsite, meaning not in your project, you actually have to provide 30% more inclusionary units on the alternative site. So we do have 15% now across the board, but we do have circumstances that they don't provide them in the project. They have to provide 30% more. Many ordinances don't have that. Ours is at 80%. There's no range right now. It's completely 80% for rental. When you get ownership, it does go up to 120%. Watsonville's 15% to 20% does go up to 80% to 100% of AMI. When I just wanted to show this for a second, many of you have also seen this. This has come before you, I think in the last year. This is our housing element, our annual progress report. Specifically, I just wanted to call attention to where our needs are. We've actually done well in the moderate and above moderate. I think we would all agree that in Santa Cruz and our housing crisis, we need so much more. But we do have a need for the very low and the low units. From 2019, you can see those years we haven't gotten, we haven't achieved those yet. We do have an opportunity to meet our regional housing needs assessment goals, our RENA goals by that period. But we do need to focus in, and it is much more likely, and this is how we've, in Santa Cruz and many other jurisdictions, have created these low and very low units, have been through a public subsidy, have been through public assistance funding from affordable housing trust funds, and through affordable housing projects with private and non-profit developers. So it's important to have this context as well. You typically are not going to see a lot of private market rate development achieving these low and very low units. So I wanna just keep that in context when we look at what we're trying to achieve when we change the inclusionary ordinance and what those other elements go into that. Looking more closely, specifically just at Monterey, I have the parts of their 20% ordinance circle that relate most closely to Santa Cruz's, that's at 80% AMI or lower. So when you look at that 20%, you see that 8% of their 20% is for moderate area median income, so that exceeds what's allowed in Santa Cruz. When you go to San Francisco, and a lot of people have cited San Francisco as a reference, and they have different for unit sizes. So between 10 and 24 units, they allow rental at 12%, at 65% of AMI. And when you get to 25 or larger, the larger projects, it goes up overall to 18% overall, but only 10% is at that lower AMI. And the remaining 4% is at moderate and another 4% at 90 to 130% of AMI. So again, I'm pointing these out just to show the wide variation between different jurisdictions. And so why I think it's really important that we look at what we're doing as we go forward and make these important decisions about our inclusionary ordinance. Again, this is Watsonville's. One interesting thing to note on Watsonville's project, yes, is right below that circle, you'll see they have 5% for section eight at 80 to 120% of area median income. It's important to note that these are not project-based vouchers for Watsonville. These are based on tenant vouchers, and you can't guarantee that. So you can't actually finance against that. So I'm really curious of how this is working in Watsonville and what they've been able to achieve or accomplish with that, whether or not they've been able to meet this. Okay, so considerations for increasing or modifying the city's inclusionary requirement. I think one of our first goals is determine what are our goals for the city? What are we trying to achieve with our ordinance? We may be wanting to achieve many of these things, but there may be some of them that resonate more with the community and the city than others. Meeting our regional housing needs assessment goals, meeting our measure O commitment, creating inclusionary requirements that can be feasibly achieved. So 20 or 25% sounds great, and I think it sounds great to many of us, but it may not be feasible at our current percentage rate at 80% of AMI. So we may wanna consider that if we want to increase our overall inclusionary rate, that we may wanna consider it at different affordability levels in order to make that actually feasible to support that development being built. So I think one of our goals should be to create inclusionary requirements that incentivize affordable housing development and also to create requirements that don't inhibit housing development overall. Different requirements for small projects, under 25, under 10, these could be considerations that we look at than larger projects to really encourage that small project viability and affordable housing creation. Could be something else that we look at as far as modifying or increasing our inclusionary requirement. I think it's also good to do a deeper dive on what some of the other jurisdictions are doing and actually see what's working for them. Many of them have made changes within the last couple of years to their inclusionary ordinances, and we haven't had an opportunity. We have looked at and have seen some recent examples of, as I mentioned, about 60 cities, but we don't have a lot of detailed information on them and we don't have the information on how well they're working. And then the last two things that we would recommend is to conduct a market and feasibility analysis for Santa Cruz for rental and ownership. As I mentioned, we don't have it yet for ownership inclusionary and determine options for consideration that we would bring forward to both the planning commission and to the city council. And so if the direction really is one of the goals to have the maximum or the highest inclusionary rate, if it's 20% at AMI, or to look at, well, maybe it's 20% at 120% of AMI, or maybe the goal is to get at that deeper affordability. So maybe it's 10% at 50% of AMI, or you could do a combination, 20% at different affordability levels, 10% very low, 5% at low, 5% at moderate. I think the point is there's a lot of different ways to get at what our goals might be for the community. And I think we need to look at what the community really needs and balance those when we come forward rather than just saying let's go for a 20 or 25% and not actually change the AMI or look at that. I think ultimately we're wanting to develop a new inclusionary requirement that's reflective of those community needs. So just to recap the recommendation and then we can go back over any of these is to consider an increase in the inclusionary percentage citywide after a feasibility analysis prepared by a qualified consultant to evaluate the impacts of these changes, to recommend specific changes reflective of newly enacted state law, recommend that council direct staff to review and bring any cleanup amendments related to identified inconsistencies created by ordinance amendments back to the planning commission. And then finally recommend that council take no further action on the additional proposed red line amendments referenced in the plaintiff proposed changes that's attachments three and four in your packet. And that concludes my presentation and we're happy to go through any of these in more detail. Thank you. Before we go to public comment, do commissioners have questions for clarification of staff? Just one clarification. You went over very quickly but I thought I heard at one point you said that the council just went back to 15%. I think it's important to clarify that the council only went back to 15% for rental housing outside of the downtown for ownership units and for rental housing downtown. It's always been 15% since 1970, 1980. Thank you for clarifying. That's right. Any questions? Commissioner Nielsen. Well, I guess I have a random question first, but is it normal that plaintiffs propose changes to ordinances? We haven't had, in my experience, I've never actually had an experience where we had anything like this of a nature and then didn't actually have a followup conversation with why they wanted the changes or really having an understanding. So the main changes that were in the settlement agreement were one that we did have quite a bit of discussion over, of those were the issues that the plaintiffs felt really strongly about and were the basis of the lawsuit. The other ones, there just wasn't an explanation for those. Okay. I was just curious. I hadn't heard of it before, so I was just curious about it. In terms of the, with the examples you gave of other communities, and I've seen it also in kind of doing my research, that there are, there are ways, I mean, you could set up these mixes of different, like where you could do very low, low and moderate in different percentages. In the research that you've done and what you know about that, is it, are they set percentages? Like, does it have to be, or has, not that it has to be, but has it been that it's 8%, 8% and 5% of like 8% very low, 8% low, 5% moderate or whatever it might be? Is it set or can the developer mix and match and kind of create their own options within that? That's a detailed question. There are some that if a developer has some choices, if they want to go very low, I've seen one or two like that. Most of them when we're doing these comparison of these analysis have laid out the combination of, as you said, like an 8% or a 5%, but they include some language in their ordinance and we have some of this as well, that if a developer wants to provide deeper affordability that council can consider modifying the inclusion requirements to accommodate that if they're willing to provide more affordability in the project. And then some have a preference for going lower to try to get at the very lower, extremely low income. Are there incentives for that? Some do, yeah. And we actually have in our ordinance that for projects that are 40% more, they're willing to provide 40% of affordable housing that the city can actually, even if it's a market rate project, but with a 40% affordability that the city can put money in the project as an incentive to reach that. And depending on the levels of affordability and the percentages that they're proposing, they may also be able to take advantage of the state density bonus. So at 11% at very low, you've seen some projects come forward where that's been proposed. Most recently, the 190 U.S. Cliff project proposed 11% at very low, which offered them the 35% state density bonus. Okay. And currently right now we'd, just since you brought state density, currently right now the 35% is the maximum bonus that's allowed in the city. As of today, yes. As of January 1st of 2020, there is a bill and I will pull that bill number up while I'm telling you about it. That will allow for 100% affordable projects to have an 80% density bonus. And if they're within a half mile of a major transit stop to have no density limitation and also to add 33 feet and three stories to whatever is otherwise authorized and provide no parking for those projects that are 100% affordable and within a half mile of a major transit stop. That's pending. That is going to be law effective January 1st as of January 1st, 2020. And the law is AB 1763. Thank you. Anything else for us before we go to public comment? Commissioner Stelman? Yeah, one question. So you started out our attachment number one, the whole settlement stuff off the table tonight as well as the next section after that with the red line marks. The actual attachments, if you look on the staff report, it lists that attachment two is a red line. It's actually the one that got in your packet is clean. So, and it's not labels attachment two, so we apologize for that. That's one of the things that makes it really confusing. Attachment three is the red line of the plaintiff's proposed changes beyond the settlement agreement. And then attachment four is the matrix that goes through one by one, each of the proposed red line changes by the plaintiffs with staff comments. Okay, got it. Thank you. Other questions, clarifying questions for staff before we go to public comment. So this is a public hearing. We'll open public comment now. You're not required to give your name, but we invite you to do so. Please line up on the your right side of the room and sign in if you would and then address the commission. We will be making a decision. Hopefully we'll be making a decision tonight based on the staff recommendation and your input. So each speaker will be granted two minutes and welcome. Hello. Good evening, commissioner and commissioner members, council members. I'm Kate Roberts, I'm president and CEO of Monterey Bay Economic Partnership. And we did submit a letter in reference to what I'm gonna talk about. It should be in your packet. So I just wanted to emphasize a few of those points and go on record here tonight to state our position on this, which is that we would like to strongly encourage the planning commissioners to not change course by referring to the inclusionary housing ordinance for amendments at this time. I just wanted to echo a lot of the fine work that staff has just recently done and presented tonight for a lot of reasons they've talked about, such as recent studies have demonstrated that highly restrictive inclusionary housing policies may result in less housing being built and the diminished affordability of those units that do get built. We're obviously needing a lot more housing in our community. So anything that could put that at risk is something that we would like to avoid. And just that there was a lot of input from community members and stakeholders that went into the current draft of the inclusionary ordinance. So should changes or amendments be considered? I think the wise course of action would be to have a more robust community engagement process around those changes should they happen. So, and just to echo again what staff was saying about doing feasibility analysis, I think that's gonna be really important before a decision is made to decide on what types of changes should be made. And I just wanna encourage you in the last few seconds I have to think about other realistic policy solutions that could encourage more housing opportunities. So as a reference to our 2018 MBEP housing white paper that really outlines several additional ways that you all could increase more housing such as reduced parking requirements, adopting enhanced density bonus ordinances, et cetera. So thank you for your attention. Thank you for your service and really appreciate your time and energy into this important issue. Thank you for your comments. Welcome. Good evening, Jane Barr with Eden Housing. I support the staff recommendations but don't support an increase from the current 15%. It's been tried and failed with other jurisdictions and I think when you have your consultant look at what jurisdictions, what percentages they have now, you won't see very many at 20%. I think it's a good idea to check with the other jurisdictions have your feasibility analysis but I think essentially you already did that when you came up with your percentages six months ago or whatever it was. So I think you're kind of doing the same work. The arena, when you look at the arena, the hardest to meet are the very low and low. It's much easier to meet the mod and above mod and generally jurisdictions will meet above mod and generally meet the mod. So I hope you keep that in mind. And finally, I just don't think we can afford to scare away developers. The return will be affected by the greater affordability requirements and the developers have other choices in other markets. And the concern is how this will affect increasing the supply of housing in Santa Cruz County. We need both market rate and affordable. We're way behind in supply. So I hope you keep that in mind. Thank you. Thank you for your comments. Welcome. Good evening. My name is Gail Jack and I'm with affordable housing now. We submitted a letter and I hope you've all had a chance to read that but I again wanna emphasize some of our points. And one of them was a study that we cited that was done in Portland in 2017. And they increased their ordinance, their inclusionary ordinance percentage to 20%. And they found in their situation that it really put a damper on what was built. They had the five years previous to this change they were building around 3,000 units a year. After this went into effect, it dropped to about 700 units a year. Now I'm not saying we're Portland, we're obviously not Portland, but just something to consider. We are in agreement to not increase to 20% for fear of putting a damper on building. And there are other ways to incentivize housing that a lot of people have talked about tonight, including what a study from UC Berkeley found would be a couple of things. Reduced parking was one, reduce the percentage of retail space and also cut in about a third, 33% off the time it takes to get a permit to develop. They found those three factors really boosted not only the development, but also the equity of what those projects look like. So I hope you consider this all carefully before your decision. Thank you very much. Thank you for your comments. Welcome. Good evening, Chair Feppin and planning commissioners. My name is Jesse Burstow, Swanson Builders. I'm a development project manager and here in Santa Cruz. And I think staff did a great job of really emphasizing the variables that affect affordable housing and market rate development. We did submit a letter. I do hope you read it. And I just wanna reiterate those points as well. Just on a grand scheme of things, 2018, California State, we built 80,000 units to keep up with economic growth of the fifth largest economy. We needed 180,000 units. And for the Bay Area, for every seven jobs that are created, one unit is being built. So it really highlights the demand and it certainly gets pushed onto our community over the hill. And we're certainly impacted by that with construction costs this past year. We've seen a 20% increase in construction. So there's certain factors that really can take effect on a proposed development. But in the grand scheme of things, as that increase in affordability, we have no issue with the 15% requirement. We think inclusionary should be part of developments. But as you start to make that increase, it starts to chip away at the financial feasibility of that project because those market rate units are subsidizing those affordable units. And then those have to go up to make up for that rent roll because we go to a lender, we go to a bank and they need their guaranteed return on that land of what is being built. So I just really wanna emphasize that as we push that up, you're squeezing the feasibility of it out. And again, we won't get any more proposals and maybe that's the underlying tone of this purpose is not to have development. So as it stands, we feel that 15%, overall, you have to take a look, 15% of something is better than 20% of nothing. So we hope you take that into consideration. Thank you. Thank you for your comments. Thanks, speaker. Welcome. Good evening. My name is Henry Hooker. I'm an architect retired. I've lived in Santa Cruz for 30 years. I am deeply concerned about the housing crisis in Santa Cruz. I think that looking at the housing that's been built in the last 20 years, we can't really say that the current policy is working for anybody, subsidized or not. And the idea of making it of somehow or other jiggering that so that there's less incentive for builders to build here or increasing the costs for the people who are trying to buy market rate houses or homes in projects that are providing the inclusionary units, it's just ultimately I worry that it doesn't make sense. So I applaud the notion that you would study this very carefully to see whether or not we are going to get more housing, ultimately for people who can't afford housing currently, but also for people who may be able to. That Santa Cruz really needs to step up to the plate and provide enough homes for the people who work here. There are not nearly enough for the people. And what this is doing is causing environmental degradation by forcing people to commute into town. And something that in the long term will make the city a better city, more responsible city, a more diverse city, improve the quality of life by having pedestrian and bike things going on in the city that are sustainable. That are sustainable. So what we're looking for is sustainable growth, I think. Thank you very much. Thank you for your comments. Welcome. Hi, John Swift. And I would just like to encourage you to think about incentivizing housing development and affordable housing development rather than disincentivizing. The density bonus law is working. I've been involved in a number of projects. We are trying to generate low and very low income units. You've seen some recent projects, I think on West Cliff Drive. The density bonus generated, I think five or six very low income units. Requiring increasing the number of affordable units, like Jesse was saying, just increases the burden on the market rate units. This increases the price that's gotta be charged in rent or for sale of those 80% or 85% or whatever is left of market rate units. And this has a cyclical effect. I mean, it compounds. The median price goes up. The median income goes up. The cost of the affordable unit goes up. It's all in a, it's going in the wrong direction. We're pushing the price up and the affordable requirements go up. Again, we really have to think about incentivizing the development of low income housing as opposed to disincentivizing. Really, that's the main point I'm trying to make. I really think we do need to study this as an extremely complicated ordinance. When we try to do these housing projects, figuring out the economics of these projects and taking into account the affordable ordinance, it's very complex. And I hope you make the decision with good analysis, good market-based and very localized analysis, not generalized analysis. So thank you very much. Thank you for your comments. Next speaker. Welcome. Welcome, Chair Bepping, fellow commissioners. My name's Mark Masidi-Miller. And less than a year ago, I was sitting on the other side of that daze with you guys. But I wanted to come tonight because I was part of the subcommittee of the Planning Commission that studied the inclusionary zoning ordinance and the amendments to it that were enacted not all that long ago. And so I'm here tonight to tell you that I think the staff recommendation is solid. The staff has changed a little bit since then, but the point is that this needs careful study. And while I'm all for affordable housing and have worked as a housing advocate for many years, currently with the communities organized for relational power and action, group of over 30 nonprofit institutions in the Tri-County area, where all I think about is housing. I want more housing, particularly affordable housing, but we have to be careful that we're building housing. The most important thing is to keep building housing because the need is so great. And so I would encourage you to just adopt the staff recommendation and advise your city council to be cautious and thorough and careful with this one. Thank you. Appreciate your time. Thank you for your comments. Seeing no other speakers, we will close the public comment section of the public hearing and bring it back to the commission for discussion. And Commissioner Conway, I see your hand first. I'm gonna lead it off. Thank you. And thank you, staff. And thank you to everyone who came out tonight to follow this complicated item and share your thoughts with the commission about these policy changes. We all love Santa Cruz and are deeply affected by the housing crisis. And it's fair to say we're here to try to address the problem. We're presented with a decision in the form of a staff recommendation and I'm gonna structure my comments according to that recommendation. First of all, we're asked to consider an increase in percentage only after financial analysis. The premise of an inclusionary housing ordinance is to require private developers to contribute to a community need by providing affordable units in exchange for the right to build housing. As with any fee or exaction, a jurisdiction must be able to prove nexus and proportionality for the requirement. In other words, the city has to show that there's a need for the affordable housing and that the requirement is reasonable. For the sake of the community, it must be a requirement that allows for creation of the housing that we so desperately need. The citywide requirement has been set at 15% through a settlement agreement. As the staff report indicates, circumstances have changed. There may be an argument for increasing the percentage to 20% but there must be an economic analysis to demonstrate whether or not it meets that test. And economic analysis will support an appropriate number of affordable units and an appropriate level of income targeting. Without a credible economic analysis, the city is vulnerable because it has not met the nexus and proportionality requirement. Inclusionary ordinances work when they are thoughtful, reasonable and stable. So the cost of providing the affordable units become baked into the development assumptions. Inclusionary ordinances are the object lesson for the importance of stable public policy that must be changed slowly, thoughtfully and seldom. That is, if the intention is to create affordable units. Finally, our policies must not disincentivize building housing and an affordable housing requirement that is too onerous will lead to no housing at all. Number two, make specified changes to newly enacted state law. Taking advantage of this opportunity wherein the city is amending its inclusionary housing ordinance to incorporate new state law, it makes sense. This recommendation makes the state language explicit in our ordinance that's in effect whether or not we act on it. So adding it will avoid potential confusion. Number three, review and bring cleanup amendments related to identified inconsistencies. The council has directed staff to bring the inclusionary ordinance back to the planning commission at a future date for cleanup language in the event there are inconsistencies or unintended consequences. I'm not positive this requires action tonight, but I agree with council and with staff that in case it doesn't go without saying, future proposed changes should be brought back to the planning commission for consideration. I have an additional comment on the future work of this ordinance. I'd like to suggest that the council consider again in the future a deeper review and possible restructuring of this inclusionary housing ordinance. In the 40 years since measure O past, this ordinance that implements the referendum has been modified many times, always in the spirit of addressing the intent of the voters. This has given us at this time an ordinance that is exceedingly complex and difficult to follow. And I'm saying this as someone who reads these policies for a living. This is a problem for the builders who are trying to create housing and the complexity of the ordinance makes it very hard for community members to see that we are asking for fair participation in affordable housing from people who are creating housing and Santa Cruz. Again, this is a comment for future consideration and please not intended to land another task on the departments to do list at this time. As a longer-term project though, this might be worth consideration. Four, make no further amendments related to the plaintiffs proposed changes. And thank you staff for the helpful analysis of the additional recommended changes outside of the settlement agreement. The effect of these additional recommendations would be to make it more difficult to build housing, especially disturbing are the obstacles they would impose on small projects which are the parcels that represent much of our potential new housing. There just are not that many larger parcels left to develop. I look forward to a robust discussion amongst the commission this evening. And with that, I would like to move the staff recommendation. All second. Okay, so we have a motion and a second. So all the discussion will be of the motion of the commissioners. Mr. Schifrin. Well, let me start out by following up with something staff said, which is look at what we need to do is look at what the community really needs. And I would argue that this community is suffering from a very severe affordable housing crisis. The statistics that I included in what I sent, Santa Cruz is one of the least affordable communities in the state and the nation. We ranked 200 and a ranking of 291 cities. We were found to be the least affordable in America for cities. We've got home. For teachers. For teachers, I'm sorry. For teachers, we have a very, very serious homeless problem and I could go on and on. We have affordable housing crisis and I think the city needs to do more to try to respond to that. I don't disagree with the notion of modifying, refining the inclusionary approach to make it more workable to the extent that it still retains its basic thrust of providing more affordable housing. But realistically in my mind, that's never gonna come if we put everything off to economic studies and more community outreach. To me, that will not lead to ultimately getting more affordable housing. We've had a year's discussion of the need for affordable housing and what the council ended up doing at that time was reducing the affordability requirement from 15% to 10% outside of the downtown area. So my sense is I don't have a lot of confidence in economic studies. They tend to show what the consultants and the staff and developers want. There are so many variables that go into whether a housing project is feasible or not. And in a market like as ours, as staff says rents go up, prices go down a little, housing prices, there's a lot of variation. When measure O passed and it was an initiative, not a referendum, measure J was a referendum, it included a 15% affordability requirement. There was no study that was done. And in the early meetings with developers, it was similar to what we heard tonight. You're gonna make housing impossible. It's not gonna happen. Don't do 15% because it's not gonna work. Well, it worked, I think, might not have provided as much housing as other people would like, but I don't think that's ultimately a problem of the inclusionary requirement. When there wasn't an inclusionary requirement for rental housing in the city, we didn't get rental housing market rate projects because the tax laws made it feasible. The fact of the matter is things have changed in Santa Cruz. Oh, I wanted to say one thing about comparisons. It was interesting, sort of comparisons are odious, but let me give you a comparison of all these other cities. Well, we are in a very special and we're not unique maybe, but we have a real specific difficult problem. We're adjacent to Silicon Valley where the housing prices are even worse. We have a university that's growing and impacting our housing demand. And so the need for housing is great and it has been for decades. And what's really changing now is we have state laws that are not only requiring the city to not be able to reduce density for a project once it comes in, but even not being able to deny a project once it comes in if it meets the basic requirements. And on top of that, there's a density bonus allowance that allows the density to go up by 35%. In addition, the city with the recent general plan with the downtown recovery plan has increased density significantly in the downtown area and other areas of the city. My view, more density makes for an economy of scale for providing additional inclusionary, lower income units. The other thing that I think is important to mention is that there are incentives now that can assist developers of market rate housing in providing their inclusionary units. The main incentive is what's called project-based vouchers where a developer of a market rate project can get essentially a section-aid voucher. So while the tenant will pay 25% of their income for housing, the developer or the owner will receive a fair market rent. The fair market rent might not be exactly the same as a market rate, but it's fairly close. In talking to the developer of the Water Street Project that just opened, those project-based vouchers made that project work financially. My sense is that if we're going to respond meaningfully to the affordable housing crisis stat, it's severe in Santa Cruz. We need to increase the inclusionary requirement. Once that requirement is increased, then I think staff will have a great incentive. The development community will have a great incentive to come and immediately try to work to make that more feasible for them. If we don't increase the inclusionary requirement, all we're gonna do is put off in time and only hear why it won't work. I think we need to make it work. So on that basis, I would make a motion to amend the motion on the floor to do two things. The main thing is to recommend to the city council that they increase the inclusionary requirement for rental and ownership units to 20%. And there's a correspondence that I said, I submitted there is the ordinance that would do that. So why don't I just start with that, just make the motion that the amend the motion on the floor to increase the inclusionary requirement to 20%. I second that. Discussion of the motion to amend. Chair Pemberg. Well, I appreciate a lot of the work of the staff and the points that were made about the concern surrounding AMI and needs for revision within the inclusionary whether it's 15 or 20. And I think that that is a conversation that needs to happen and should happen. I think that given the fact that state laws are changing, that densities unlike in the early 80s, when the original measure was passed, are going to be significantly higher in the downtown potentially hopefully beyond the downtown as well, given the return to the corridor planning and then given the new state laws that override any effort to deny the potential for density and so far as it meets the general plan, we are about to embark on potentially, a lot of increased development on a scale that is I think as commissioner Schifrin was saying an economy of scale that can make it feasible to have more inclusionary. And on the other side, if we don't have inclusionary and create an imbalance on a larger scale between let's say 85% to 15% of unaffordable to affordable housing that could also have its own effect. So I'd like to consider also the effect of larger and larger amounts. What is essentially not moderate but unaffordable housing to the majority of people that live in Santa Cruz on gentrification and displacement. And the areas I don't know if people are familiar for instance with the urban displacement project UC Berkeley, but they've done mapping of areas throughout the Bay Area as well as in Southern California and other parts of the West and they're starting to do projects around the country looking at risk of displacement. And that is often associated with areas that are hot mark in hot market cities where there hasn't been as much development where development is imminent where laws are changing to allow for increased development alongside areas that are what they're calling exclusionary which are already overpriced. And our downtown area is at very high risk of displacement right now. And so we have to consider not only the concerns of developers but also the concerns of the majority of people living here currently as well as people who are not able to afford to live here but are working here including teachers and public sector workers and others. In terms of creating an exclusionary market via a much larger proportion given the density of unaffordable housing. So that's one concern. Another concern I have and then I would just make in relation to feasibility studies. So I think feasibility studies obviously are much more commonly done now than they were, I guess they were not done really in the early days of inclusionary ordinances. And so I've been trying to read up on feasibility studies and I found this new report as of November 2018 produced by the Turner Center for Housing Innovation at Berkeley Granted Solutions Network, Lincoln Institute of Land Policy called Strengthening Inclusionary Housing Feasibility Studies and I can share that with the commission. And this is just the executive summary but it's a group of folks that came together that included people in housing economics, people with expertise, eight consultants with extensive professional experience producing these studies, people who are housing managers, people who are in economic development and so forth, coming together and reflecting on I think one of the things that Bonnie Lipscomb mentioned which is just the wide variety of both inclusionary ordinances as well as feasibility studies and came to the conclusion that there's really kind of no best practices right now regarding feasibility studies and that there's a wide array of metrics and measures that are used and that much of this depends on sort of who comes together around what kinds of priorities for these studies. And I wanted to just read one piece and I'm gonna try to speak as quickly as I can because I don't mean to take so much time but a point of agreement was that more effort should be directed to helping policymakers and the general public understand the limitations of these studies and their inherent imprecision. Sometimes cities want to treat the results of feasibility studies like appraisal results but this may be the result of a misunderstanding of these studies' role and limitations. Limited data and the inherent diversity in the economics of different development projects mean that feasibility studies which only examine a small number of project prototypes will never be as objective and definitive as policymakers may want them to be. Instead of providing a definitive answer to what is feasible in all cases, participants stressed that feasibility studies should be seen as providing a reality check and a way to illustrate the potential impact of proposed policy changes. Similarly, feasibility studies do not provide the single correct policy answer. In fact, successful adopted policies do not always exactly mirror the results of the feasibility study. Participants seem to agree, and this is I think a really important point, that a wider understanding of these limitations could lead to more humility in the policy design process because all of the important economic feasibility questions cannot be answered definitively and because economic feasibility studies examine a single point in time and cannot accurately project how market changes will affect development feasibility, policies should build in periodic assessment and opportunities for program refinement. So I guess I would say, in some, that if we go with a feasibility study and there are some best practices, these folks came together to argue for certain kinds of considerations that should be brought to bear on how it's structured, one key point being transparency and replicability and another being the ability to return and revise the conclusions of the feasibility study periodically annually, every two years and so forth. But in addition, if we don't go with the feasibility study that we can still return periodically, annually for every two years to thinking about how is this working? And I think actually that would be really a healthy thing to have as a practice, is to look at what are the impacts of this? We can anticipate under all kinds of different circumstances on the eve of what are about to be these state laws that are gonna really change the environment considerably. And it's gonna be quite difficult whereas we can take this kind of, I think really important step forward saying, this is a value of our community, this is something that we hold as something that is a main goal motivating a lot of the work that we're doing on this commission and in the city right now, which is to address this crisis. And we can do so thoughtfully and collectively while continuing to revisit this policy, knowing that feasibility studies themselves are imprecise and complex in all kinds of ways as well. So that's something that I would like to add to that amendment. And I think I'll leave it there for now. But I just say that the proposed ordinance changes up, Bonnie just told me it's up on the out there so that everybody can see what the proposed amendment to the amendment is to adopt it to recommend that ordinance change. Commissioner Greenberg, I'm not sure if I understood. Were you suggesting a change to the motion to amend? Well, I think that, I mean, I was thinking that it could be even a separate amendment or motion, I suppose, which is that if we do go with the feasibility study, I could propose another, I'm supporting this amendment that we not do the study. On the other hand, in the event, maybe I should wait for this one on this. Yeah, maybe hold the hypothetical, yeah, we'll have a. There'll be an outcome that'll potentially enable you to act on that. Commissioner Nielsen, and we're on again, just to clarify procedurally, we're on discussion prior to a vote of not the original motion from Commissioner Conway, but of Commissioner Schifrin's motion to amend. Thank you. I think all of us up here sitting can agree that more affordable housing is needed in the city. That's there, there's no argument there. I think it's just a matter of how we're gonna get there. And I don't think we're gonna meet it by by creating haphazard policy or revising our current policy. And so any changes that want to be considered or that we wanna consider, I think need to go through some real study that is conducted and that's rigorous. And I understand that the study may not hit the number exact or it might not hit the mark exact, but at least with taking it through that process and having it be done in a thoughtful way, I think it's gonna get closer to what's needed for us in the city rather than just choosing a number just randomly. What I'll also say is that in the last few years we've been really trying to tackle and address the affordable housing crisis that we have in our city. We've been working on the inclusionary ordinance which we're talking about right now. We talked about density ordinance. We talked about the ADU ordinance. We've talked about the downtown plan, the corridor plan, which unfortunately is on the back burner currently. But all of these things need to work together. All these plans and policies and ordinances need to work together to create the platform for the affordable housing solution that we need to have. And I think that, and there needs to be an analysis of all of that and how that all works together. And so I'm just basically continuing to get to the point that I think that some sort of feasibility study is necessary if changes are gonna be made. I mean, part of me feels that as Mr. Swift said when he spoke, the density bonus is working. And there are developments that are happening. I mean, 190 West Club is an example of density bonus. That's the first project in this town that has used density bonus. I remember correctly, it's 10 affordable units, but eight of them were very low income. And which, if you looked at the rena numbers, that's two thirds of what we've developed in the last four years. So just right there in that one project, it's created a good amount comparatively for that very low income. So I think as we have it, we have the density bonus ordinance that we have, it's as we have it written, it works. And then in addition, in the last couple of years we amended or we've been working on the downtown plan, that's another plan that we've been working with trying to increase densities. And thereby with increase of density, we are looking to create housing. And by creating housing thereby, we are also looking to create more affordable housing. So I think that what we have and what we've created and we've spent a lot of time up here talking about this and creating these policies and these ordinances and reworking them and tailoring them that we need to give ourselves some time to see how it works. I mean, I don't think we need to rush into changing things beyond what we have right now. I think we need to kind of see how it actually works and then make adjustments as we see how it goes. So that's my feeling about increasing our percentage. I don't think we should be increasing it, although if it does come down to that or that's something that's desired, then I think a study has to be done for that to see what's feasible. In addition to that, if we're gonna be looking at changes, I think we should be looking, I think we should open it up. I think we should be looking at additional changes that can happen. I'd like to consider more ways to incentivize development and incentivize affordable housing. So one being enhanced density bonus. I think that's something that the city should be potentially looking at. I think development fee reductions should be another thing that the city continues to look at. Fast track permitting is another one. I mean, we're talking about reducing costs for developers will help this, it all plays into it. So the more we can reduce the cost, the more housing we can get. Reduce the parking requirements. I think unbundling the parking is another thing that needs to be looked at. The, I mean, rent alone can be reduced just by unbundling parking. Like where, so the developer is not, the renter does not is not required to be renting a parking space. Reduce development standards. Continue to look at that. How can we continue to reduce those standards to incentivize housing and incentivize affordable housing and also ministerial approvals? Again, it's, let's make this easier and let's make it cheaper so that it can happen. Those are my comments. Thank you. Vice Chair Spellman. Thank you. Yeah, I share many of those comments that the commissioner just spoke of. I'm not in favor of an increase to 20%. I think as a community, we're really struggling to find ways to make affordable housing in our community. And specifically the low and very low income level housing that's, you know, we're low fully lacking in those areas. I would also encourage incentivizing those components. It sounds like the state's gonna do our job for us if we don't start to address it ourselves and we're gonna be in the same position of not being able to control it. So I think we need to be very careful on how we do that. Just increasing from 15 to 20%, I don't think is doing that. We're not essentially getting the units at 15%. I don't understand the logic that we're gonna get them at 20%. I think there were some thoughtful statements made tonight. I think a study is an imperative component to this and being smart about the type of study we're asking for is also another prudent approach, some way of localizing what the analysis is and how we really fundamentally understand our community and what's really needed here. It's not about paying a consultant who's done 20 studies and tells us that we can afford 15% or 18%. It's more about what's reasonable in our community. This is an extremely complicated section of our code. Having gone through it a year ago and now revisiting it in light of essentially a lawsuit that has sort of forced our hand here. It's shown me how incredibly complex the issue is just as it's written. So I too would be supportive of a long-term approach to how do we make that a more manageable document so that all parties can maneuver within that in a way that actually gets us the units that we so desperately desire. Yeah, other things are, how can we focus our efforts on the things that we can actually control? We operate in a development climate here that is incredibly challenging even to, for example, affordable housing developers. I've spoken at length with both the builder and developer of the Water Street Project and you're right, without the vouchers that project would never have happened. It also got a loan from the city for $4.7 million, which how many of those projects can we afford to give that kind of funding to? There is also substantial tax credit equities that went into that that would have been the third component of that scenario that would have made that project not pencil out. So it was that combination of creativity and ability in that moment in time, having funds available to support that project that we got the number of affordable units that we did. But that is, you take a step back and look at that and you see how incredibly difficult it is just to get to the table to get that project built with people who have the best intentions for putting that type of housing in our community. The other thing we can control too is our process, right? Our process and how we can streamline some of the components that are gonna deal specifically with affordable housing. So that's some of the thoughts I had around, my thoughts are to incentivize the low income as opposed to just wholeheartedly increasing the percentage. I think that is the piece that does require further analysis and people that delve in those areas much more broadly than a commission who's on this for a finite period of time. So I would be in support of that and not in support of skipping that piece. I don't think I need to repeat. I'm trying to think about what I can share but it's not a repeat of what's been offered. And we still have a main motion to get back to on discussion. So I think it might hold most of my comments on that and say that I'm not. I just clarify one point that made about the difficulty of building 100% low income projects because I thought. Could I actually, yes, and could I finish my comment? I was just worried you're gonna start to say we're gonna have to vote now and I just would like to say a few words before. Thank you. That upset me. So I'm trying to, I lost my train of thought. Maybe I spoke too quietly so you interrupted me. Don't remember what I was saying. So go ahead and share your comments. And I just wanna say that we don't, what we get to do is we get to persuade one another and then we have a vote. That's all we get to do. So offer your last comment and then I will call for a vote. We also can get to discuss issues. I mean, it's not just, you know, everybody just says whatever they think and then we vote. Sometimes there can be some dialogue among commissioners at committee informative. So I think that's, there's nothing unusual about that. Commissioners do have things to add to what other commissioners say. And I think that's happening. So I mean, what I was going to try to clarify is that, one, I agree 100% doing affordable housing, 100% affordable projects is more difficult than doing market rate housing. Market rate housing is difficult to do, but tax credits, all the different funding sources that have to come together for an affordable project, 100% affordable project is very, very difficult. And those subsidies, those federal and state subsidies are generally only available for 100% projects. When I was referring to project-based vouchers, they are a form of subsidy that can be applied to a 15% or a 20% inclusionary project. They don't have to be 100% affordable because they can go and they can make that internal subsidy that is required for an inclusionary unit more feasible. That was the only point I was trying to make. I totally agree with you about the difficulty of doing 100% affordable income projects. Sure, Conway. I'd like to call the question on the proposed amendment. Okay. Can I just add something? So we've all spoken and we have a main motion to get back to. I'm kind of counting the votes and I don't think there's support for the motion to amend, so I'm going to call for a vote on the motion to amend. All in favor? Aye. Aye. All opposed? No. No. No, so the motion to amend fails on a two-four vote with commissioners Schiffer and Greenberg-4 and the rest of us against. And then when we were back to discussion on the main motion, commissioner Conway's motion, wants to leave that conversation next. Are we near end of discussion on that? Oh, I did want to discuss the other recommendation, which has to do with amendment to the section. That's the section that it is, it's on page four of the report. And the planning director referred to this. This is the section of the inclusionary ordinance that really has to do with the maximum sales price. And the recommendation was to add the language government code section 65589.5 or any other ethical code. I looked that up and it's like an eight or nine page, it's the whole housing accountability act. And my sense is that what the section that's relevant to the maximum sales price really was what the planning director said was subsection O, which deals with, because this section says you can't really change maximum sales prices if certain things have happened. And what that section O says is if somebody submitted an applicant submitted a preliminary application and that's been accepted, then you can't change the maximum sales price. And I think that's state law, that's fine. I don't have any problem with that. I just think putting in our ordinance something that will make it so much more complex for the public of anybody who tries to figure out what we're doing and have to read a nine page housing accountability bill. I couldn't find that. I mean, I didn't take a lot of time. I couldn't find section O. So my recommendation is to approve the staff recommendation for this change except have it say government code section 65589.5 subsection O. And I'm just, I'd ask staff if that was an acceptable change to them. I just think it makes understanding the ordinance a little bit better. And I'd ask it, I'd ask that be accepted as a friendly amendment. Is that accepted as a friendly amendment? I don't believe it makes it better, but I will accept it as a friendly amendment. I forget, do we have to have the second? Yeah. Do you accept that as a friendly amendment? I have a question to staff agree that that's fine. I mean, did you guys look into it and does that make sense? That is the subsection. I think it's fine either way. It was initially left broad because other portions of that code can be interpreted as applicable. However, the next clause there or any other applicable state codes. So either way it's fine. Adding subsection O certainly points them directly to one section that is definitely applicable. All right, thank you. Yeah, that's all except that. So the amendment is the 6558950. Okay, subsection O, letter O, not zero. Right. You have that as an amendment, a friendly amendment, okay. So other discussion? So we, I'll ask for a roll call vote. Commissioner Shifrin. No. Commissioner Conway. Yes. Commissioner Nielsen. Aye. Commissioner Greenberg. No. Commissioner Singleton. Vice Chair Spellman. Aye. Chair Pepping. Aye. So the motion passes four or two and do you have the eyes and nose? Okay, so thank you to staff for that. Unique to me anyway that we have a litigation settlement that comes to us and then council gives us part of it already decided and asks for more input. So thanks for trying to help us make sense of that. If I could just add one thing, I forgot to acknowledge at the beginning two of our housing team who were here who did a lot of the background work for this meeting. And that's Jessica Miller, our housing program manager and actually Jessica DeWitt, our housing program manager and Jessica Miller who is also a part of our, integral part of our housing team. Thank you. Thank you. Thanks for members of the community that came to share your opinion on this. The next agenda item, agenda item is information items. Do we have any? Yes, just a couple of updates. The next projects that the commission will be seeing are one, the Circles Church, Erich Circle on the west side that is narrowing in on the final issues that it is finishing up addressing and will likely be before the commission in the next couple of months. Potentially in December, otherwise in January is a likely timeline for that. And then there are various downtown plan uses that are proposed to be updated. The commission will recall when we updated the downtown plan in 2017, we made some modifications to the uses that were gonna be amortized after a 20 year period, particularly as they relate to alcohol uses. And that 20 year period is coming up in 2020 just about a year from now. So October timeline of 2020. And so we'll be bringing those alcohol related uses as well as auto related uses and some changes to personal service uses in particular tattoo parlors, which are now treated the same as any other personal service use. And then relaxing some of the proposal to relax is some of the requirements for personal services on sort of the periphery of downtown. And then also the commission has been working, subcommittee of the commission has been working on application requirements. And it's my understanding that those will be coming up pretty soon. I don't know if Vice Chair Spellman would like to speak to that. And then there was a request at the last meeting related to additional subcommittee work for our advanced planning team that might be able to supplement some of the things that we're doing. So those are the things that are sort of in the hopper and that you can expect to see. We do not expect to have a regular meeting. I believe it is on the 12th. However, we may have, or excuse me, yes. Not on the, we're not expecting a special meeting on the 12th, which at one point was being considered. And we may be reaching out to you to see if there is a quorum for the 19th given it's proximity to the holidays, but that would be a regularly scheduled meeting. So you're saying there's actually, the next regular meeting is the fifth. And you're saying we're not gonna have a regular, we're not gonna have a meeting on the fifth? I believe that's the case. I'm looking over here. Yes. So we may have a meeting on the 19th. We may have a meeting on the 19th. And possible that there'll be a meeting on the 12th? We don't have the noticing out. We've passed that noticing out, so that's not an option anymore. Okay, right. Yeah, we were targeting, potentially doing that for some projects that might be there just because we're getting pretty close to the break on the 19th and wanted to get a little bit farther in advance of that break and hopefully have people more likely to attend. But we couldn't make that. So we might be reaching out to you for the 19th. I'll just tell you right now, I'm not available on the 19th. So the heads up. Anybody else wanna share their availability? Staff? Sure, yeah. Okay. I'm available. Thank you. We'll appreciate that early heads up and we'll have Tess send out an email or Sarah will send out an email. I had a question on the application subcommittee because in reading SB 330, it seemed like the state's not telling the city what has to be in the application and limiting everything else. So it's, I took it that it wasn't even gonna be possible for the subcommittee to come back with anything that they came up with because the state is sort of. We should look at that for sure. Are we talking about the streamlining of the process? Objectives. No, that is just what would be in an application when somebody applies what they have. Right, which is part of the stream. Yeah, so that would apply I think to subjective requirements. I don't think the work that we're doing is in that realm. This is more how do we present projects so we can easily understand what's happening? It's not a design style or something of that ilk. It's more a basic submittal requirement that would get us more consistent documentation. Well, what I remember one of the concerns that you had was having information come to the commission that showed what was proposed, what was around the particular project and reading SB 330, you can't do that. All they have to do is say what they're doing on the site. So that's why I was just concerned whether, I mean, I agree that what the subcommittee was working on was worthwhile. I just don't know whether, I mean, we can maybe ask developers to do it, but I'm not sure the city can require developers to present anything other than what's in the state law. Do you see that differently? I think one of the concerns was that we were getting applications that had some kind of variance or didn't follow some of the requirements and there was no explanation for why and we were hoping to have some kind of a form where they could say, they're following this check and then in certain cases now and then give a reason where there was some kind of mindfulness on the part of applicants about actually trying to follow all the rules or explaining reasons for not. And so that would, yeah. All of those are part of it. Yeah, and so regardless of what the rules are, yeah. The good news is, is the bulk of that work is completed and if it's not applicable, I still think it's a better document than what we had before. If there are things that a particular project that's following some submittal from the state rules that doesn't have to apply, then they're gonna just do what they wanna do. But in general, it's a better document and we'll have a better process because of that. And that will be coming to the commission. I would guess in January, we're close to finishing it up. It's being circulated to staff for final comments and edits and then we should have it ready to present. Ask a question about that. Go ahead, Commissioner Conway. Excuse me. I was just wondering if that's part of your analysis of what you're doing for your objective standards is, this seems like it would be a perfect time to have that integrated. So, a lot of responses to the comments up there. SB 330 specifies the requirements that come into preliminary review applications. And it doesn't speak to the same level of specificity for regular development applications. But it says that the city can develop a set of rules and identify, we do need to clearly identify both for our preliminary review application and for our formal submittal application, what the submittal requirements are and put those online for the development community to see. We will have some ability to still use subjective standards. And so I think there may be some value in having the adjacent properties. We're just limited in how we use them. And so we cannot use them to reduce the number of dwelling units. We cannot use them to deny projects. And so this is all new. We're certainly learning here and we look forward to working with the commission as we learn, we'll share information with you. And we look forward to having the subcommittees work benefit the application submittals that we have so that even if we've got a limitation on how we can use that information, we've got that information so that if we do have the ability to use it to make the project better, we can do so. I think we're into oral reports for subcommittee and advisory reports, but since we're already into that, did we skip any other information items? That was it for me. Okay, and then do you have a subcommittee update? Well, since I on September 17th went to a community meeting, I feel I should report on it, even though if I hadn't taken notes, I'd have no memory of it whatsoever. But there was a, I was the only commissioner there. It's a project on North River Street. I don't know if it's moving forward or not. It seemed to be in a very early stage. I think it was mixed use. It's taking the two parking lots that are on North River. There were 13 people at the meeting. The Sequa document is gonna be required. There are air quality and site stability issues. It's right against the cliff. So the people who were there were very concerned about that. There's gonna be office, 30 parking spaces on the ground, two levels of apartments, 22 one bedrooms, four studios, and what the proposal was, two inclusionary units, the developers, architect, didn't seem to have an understanding of the city's requirements. So it was an interesting meeting. Since now all of us can go to any of the meetings if there's anything. I just sat there and didn't say anything and I can understand the urge to say something at these meetings because it's kind of like, wait a minute, there's a 15% requirement, but I was good and I didn't say anything. But I guess it's problematic. So I did want to make that report. Thank you. Any other OR reports? At the meeting is adjourned. Julie.